Crypto Sapiens - CitaDAO | Tokenized Real Estate
Primer: Joel Lin is a contributor at CitaDAO, a real estate tokenization platform that’s powered by DeFi. In this Crypto Sapiens episode, he shares his inspiration behind CitaDAO, various features of the project, their partnerships, and his thoughts on subDAOs.
Background
Previously, he was with UBS investment bank, Capitaland, and CBRE
His crypto journey began in 2017/2018
Was with the institutional landlords. They received many real estate tokenization requests from projects to inject their properties into them
There were 2 glaring issues which they could not get good answers:
How could they enforce their rights to redeem the property with the real estate token
How could they exchange the real estate token for liquidity in the secondary market
Got together with a group of lawyers and began brainstorming on a legal structure that will grant the right to redeem the underlying title deed with the real estate token
In October 2020, they had a breakthrough and found it in the Commonwealth legal framework
Got a prestigious law firm to issue a legal opinion validating the legitimacy of their structure
A family office was confident in the legal structure and injected their real estate portfolio into their project
Reached out to the DeFi community and the response was overwhelming and supportive
What Inspired Him To Build A Product At The Intersection Of Real Estate And DeFi?
Has been in the real estate space for the past 12 years
What frustrates him about real estate is that the real estate sector is illiquid. It is a USD $280 trillion market but most of the capital is locked up and not put to use
Their plan is to use DeFi to unlock that capital by improving accessibility, liquidity, and composability
Believes that there will be two prices for real estate:
Price of real estate on-chain
Price of real estate off-chain
On-chain real estate will have a higher value than off-chain real estate because there are more use cases for the former
How Could Someone Use CitaDAO To Unlock The Capital In Their Real Estate?
CitaDAO is a permissionless two-way tokenization bridge
To unlock the equity, one has to give up ownership of the whole property by selling it to a special purpose vehicle (SPV). They will get cash in return for selling their property
To retain the right to redeem the title deed, the owner would have to hold Real Estate Tokens
CitaDAO enables landlords to list their property on the platform after an ownership verification check
The DeFi community would be invited to participate in fractions of the property through a process called Introducing Real Estate On-Chain (IRO)
For the property owner, they could choose to give up their equity and receive the sale of the property in cash or keep some of it in real estate tokens and collect the rest in cash
Once the IRO is successful, a bridge would be formed. The NFT representing the right to redeem the title deed would be minted
The NFT will be custodied in a smart contract and fractions of the smart contract, which are ERC-20 tokens, will be deposited into buyer’s wallets
The real estate token could be paired up with USDC and deposited into liquidity pools to mine the CitaDAO token
Their team has been speaking to some of the lending protocols regarding collateralized real estate tokens
Last month, CitaDAO integrated with Chainlink to bring real world valuation of real estate on-chain
“Now you can literally access your real estate liquidity on-chain in 5 minutes. No longer do you have to wait like 30 days, fill up a whole bunch of documents, doxx yourself to the banks inside out before they will even give you money.”
- Joel Lin
What Is A SPV?
The SPV is a legitimate company in the real world
It is set up to ensure that real estate token holders get a clean title of the underlying title deed
The only way to get a clean title deed is to transfer the title. During the transfer process, any existing encumbrances, mortgage loans, and liens will get removed
For the IRO to be successful, 100% of the property have to be bought up by the IRO participants
What Does Their Integration With Chainlink Look Like?
Using Chainlink to pull real world valuation of the real estate on a monthly basis
There will be at least 2-3 valuers that will be appointed to provide valuation data
What Stage Is CitaDAO At Now?
Their first IRO is coming up soon. It is a bank building in the capital of Wales in the UK
Have ~$200m pipeline of buildings to be tokenized
“It can be symbolized as the banks paying homage to the DeFi space.”
- Joel Lin
Their smart contracts have been audited and cleared by ABDK
Will be introducing their community to their testnet to familiarize themselves with the platform
Will People Be Earning Rent From The Property?
The rent will not be distributed back to token holders.
Rent will be used to buy back the real estate token on a regular basis and burned
How Do People Participate In The DAO?
Is a very young DAO
Need support and help with building their own DAO infrastructure and policies
Looking for frontend engineers to integrate the frontend with the backend
Trying to grow their community and partnering with other DAOs
His Thoughts On SubDAOs
Did not imagine that subDAOs would actually happen, but it happened naturally.
In one of their community calls, they spoke about real estate as a hedge against inflation
“That's the beauty about DAOs. They are so humanistic. They're almost like human beings by themselves.”
- Joel Lin
One of their community members started InflationlessDAO, which hedges against inflation for other DAOs on-chain
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